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‘Weed Apocalypse’ Hits California Dispensaries This Weekend

By Roger Malespin photo/istock/:Konoplytska

This past Sunday, July 1st, marked what is called the weed apocalypse in California, which has retailers scrambling to sell cannabis and cannabis products that do not comply with state guidelines. The state passed recreational cannabis use earlier this year, but gave six months in order for the state authorities to set up a cohesive regulatory system, as well as give retailers enough time to stock enough legal product to keep their businesses viable.

While legalization is a great thing overall, this does come with some problems for retailers. The state Bureau of Cannabis Control, which oversees the industry, now enforces strict guidelines for all products that cover potency, contaminants, and more, leading many retailers with a stock supply that doesn’t meet those guidelines. As a result, those companies are unloading product at massive discounts just to get rid of it, not to make profit.

Jerred Kiloh, who owns ‘The Higher Path’ in Sherman Oaks, said “I’m losing anywhere between 30 and 40 percent on every sale just so I don’t lose 100 percent, because under current laws I can’t give product that is non-compliant back to distributors.”

In an industry that is not turning profits for smaller companies right away, this can be a devastating blow - one that they might not recover from. There’s a good chance that many of the businesses that do not recover will go into the underground market, which is still thriving and will continue to for at least the short term future.

Additionally, in the past six months, retailers have struggled to acquire enough product that meets the new state guidelines because of a lack of testing facilities in California. The limited amount of testing facilities created a backlog that was not able to supply all the businesses that needed them.

The Bureau of Cannabis Control remains adamant that the time they allotted was enough. “We issued our emergency regulations back in November, and at that time, we were pretty clear about the fact that there would be a six-month transition period for retailers to use up their existing supply,” said Alex Traverso, a spokesman for the bureau. “We felt that was a sufficient amount of time to deplete stock on hand and adapt to California’s new rules.”

Many market experts did predict six months back that the majority of the small dispensaries would go out of business because of the state guidelines.

While this all may be great news for consumers, who can enjoy the discounts before the unapproved products are destroyed, they will also see a number of familiar dispensaries close shop. It’s important to remember that legalization is still new in America and will have growing pains. The cannabis industry is a very tough one to break into, and politics can and will affect newcomers even more than money could. The new state laws will certainly lead to a much smoother, safer industry than one that relied mostly on grey markets, but in the meantime, many small businesses will be unfortunate casualties of that transition.